Correlation Between Le Travenues and Cantabil Retail

Can any of the company-specific risk be diversified away by investing in both Le Travenues and Cantabil Retail at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Le Travenues and Cantabil Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Le Travenues Technology and Cantabil Retail India, you can compare the effects of market volatilities on Le Travenues and Cantabil Retail and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Le Travenues with a short position of Cantabil Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Le Travenues and Cantabil Retail.

Diversification Opportunities for Le Travenues and Cantabil Retail

0.85

Correlation Coefficient

Le Travenues  Cantabil Retail

Very poor diversification

The 3 months correlation between IXIGO and Cantabil is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Le Travenues Technology and Cantabil Retail India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantabil Retail India and Le Travenues is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Le Travenues Technology are associated (or correlated) with Cantabil Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantabil Retail India has no effect on the direction of Le Travenues i.e., Le Travenues and Cantabil Retail go up and down completely randomly.

Pair Corralation between Le Travenues and Cantabil Retail

Assuming the 90 days trading horizon Le Travenues Technology is expected to generate 1.15 times more return on investment than Cantabil Retail. However, Le Travenues is 1.15 times more volatile than Cantabil Retail India. It trades about 0.36 of its potential returns per unit of risk. Cantabil Retail India is currently generating about 0.35 per unit of risk. If you would invest  14,258  in Le Travenues Technology on October 5, 2024 and sell it today you would earn a total of  3,563  from holding Le Travenues Technology or generate 24.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Le Travenues Technology  vs.  Cantabil Retail India

Le Travenues Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Le Travenues Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Le Travenues displayed solid returns over the last few months and may actually be approaching a breakup point.

Cantabil Retail India

Risk-Adjusted Performance

14 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cantabil Retail India are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady fundamental drivers, Cantabil Retail demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Le Travenues and Cantabil Retail

The main advantage of trading using opposite Le Travenues and Cantabil Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Le Travenues position performs unexpectedly, Cantabil Retail can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cantabil Retail will offset losses from the drop in Cantabil Retail's long position.

The idea behind Le Travenues Technology and Cantabil Retail India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.